Shares in acquisitive vet services provider CVS (CVSG:AIM) are down 23% year-to-date following a savage sell-off triggered by the launch of a Competition and Markets Authority review into the UK pet industry, prompted by an uptick in vet prices driven by industry consolidation.In response to the review (7 September), CVS highlighted the ‘significant shortage’ of vets in the UK and stressed that employment costs represent ‘the most significant proportion of our cost base’ and its pricing reflects this situation and other inflationary pressures experienced in recent years.

The CMA probe is potentially unhelpful for pet food-to-toys purveyor Pets at Home (PETS) too, since one-third of the retailer’s profits are exposed to the veterinary industry.

However, Shore Capital senses the company might not be the real focus of the investigation. It adds: ‘Pets at Home has actively sought to innovate within the veterinary sector, exemplified by the Vets4pets care plan – a cost-effective scheme covering routine care and insurance. Furthermore, Pets at Home adopts a more conservative investment approach per clinic, which mitigates the pressure to deliver immediate returns, distinguishing it from its corporate-led peers.’

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